JNPR CC Q4 January 2002
Q4 sales as outlined i n warning.
Sale 151 mil. EPS 5 cents.
887 units sold. 11,800 ports.
1 ten per. customer.
??? new customers. XOXO, Inmarsta. Red Iris in Spain,
Chunwai telecom in China.
Breadth and diversity of accounts. Geography and types of applications varied.
Completed acq. of Pacific Broadband in Q4, added cable access product. 2 cable modems for every DSL line installed in the USA. Expect VoIP, DVD on demand and games to drive demand.
Margins still intact at 60 percent. DSO in range of 55 to 65 day for the year.
Customers now 500 in 45 countries. Double what we started the year with.
4 new software releases and 47 new interfaces during the year.
Core, access,cable and mobile markets targeted.
Innovation adds barrier to entry to market segment.
New COO to manage day to day marketing, sales and manfacturing.
2002 guidance:
Where will network intelligence reside? On the premises of enterprise customers or in the PTT's. Expect the PTT model to win. PTT's need to have a realible network to do that though. Current IP infrastructure does not have this.
1.7 bil in equipment installed to date. 300 mil in R+D spent. 500 customers.
Financials:
Rev 151 mil down from 201 mil Q-Q
B2b > 1.0
WCOM only > 10 per customers. Cuts at other carriers having effect.
Inlt rev 24 per down from 34 per Q-Q. weakness in Asia.
For year total Intl sales 31 per. of rev. down from expectation.
Rev from direct sales force 67 per. up from 58 per. Q-Q.
GM 61.2 percent. up from 60.4 per q-q
R+D 21.6 per ver 18.8 per q-q
S+M 19.4 per ve 16.7 per q-q
G+A 5.6 ver 4.6 Q-Q
Op Ex includes additional 1.2 mil from PVC acq.
27.7 mil in good will write offs
R+D write off of 4.2 mil due to PVC acq.
Op Ex. down 10.1 mil Q-Q, down 21 mil from Q1
OM 14.4 per ver 20.4 per Q-Q
Tax Rate 32 per.
Cash 1.7 bil, positive cash flow of 28 mil in Q, 380 mil to date in year
AR 103.5 mil
DSO 62 days up 12 days Q-Q due to poor linearity in Q.
Deferred Rev 36.8 mil, uo 4.8 mil q-q
1226 employees up from 1085 last Q, due to PVC acq.
2002 guidance:
Visibility still limited.
Q1 Rev 150 to 155 mil, EPS 3 cents
1H Rev 305 to 315 mil, EPS 7 cents
Acq add 7 mil to run rate.
2 mil to be invested in ERCIY joint venture.
GM at the 61 percent
Interest income will decrease due to lower interest rates.
Tax 32 percent in 2002
Expect to remain cash flow positive.
No activity in stock re-purchase.
Q: Color on weakness in Asia? break down. Guidance for First half of year? Cap Ex?
A: Intl softnesss due to short fall in Asia not Europe. More fall off in Asia. North Amer. still a function in individual carriers. Europe not country specific. Depends on company. Europe was down, but not as much as expected. Asia was down more than expected.. Cap Ex 30 to 40 mil; for year.
Q: Linearity in Q?
A: Was back end loaded, but is typical of Q4 in past. No trend.
Q: Number of units shipped? Short fall from 10 per customers ERICY and Q not coming back?
A: 887. 1025 last Q. No particular customers. Sales in asis below expectations.
Q: Progress in wireless area. Rev from ERICY joint venture?
A: In December Inmarsat indicate acceptance of joint venture products. No rev to date. Seeing some revenue from China Mobile though aas a result of partnership. Business built on core router business. Growth going forward will be due to access portfolio, cable piece, and mobile products. This drives traffic growth to drive demand for core products.
Q: Percent of 01 sales that will not be coming back for more orders?
A: Very little exposure to those types of companies in 2001. Most of ILEC built out in metro area. Had some exposure in Pan-Europe area earlier in year, but now gone. No exposure to vendor financing. Customers we had will be customers of future. Lost customers very small.
Q: China stable, Asia weak in pre-announce. Still the case?
A: No effect of China telecom announcement. Seeing some effect in Japan also. Low sales surprised us in this region.
Q: Competitors? CSCO 12000?
A: Same competitors and conditions of the last few years.
Q: Carriers happy with speed and capacity at core. Are the 40 gig router a 2002 opportunity?
A: Increase access will drive core equipment demand. Simplicity to manage network will be key. Optical infrastructure already in the ground. Laying cable is current not the issue. Higher bandwidth easier to manage than a smaller number of narrow bandwidth systems.
Q: Cash flow from operations? DNA? Steady state cashflow going forward?
A: 14 mil charge included in 28 mil positive cash flow. Still have some ECM liability.
Cash flow will be 20 mil in next Q. After that will not have ECM charge.
Q:Any pricing pressure? Re-negotiation of terms?
A: No change noted last Q. Changes are more in over all cap ex for year.
Spending smaller amounts of money more frequently. over shorter time periods.
No competitive pricing pressure. No one buys cheaper routers because they are inferior.
Q: Mix of first half of 2002? Given access focus. GM will suffer?
A: Q4 numbers, units shipments down, interface decrease less than unit decrease Q-Q. GM less impacted since more interface cards shipped.
Q: PVC acq. DOCSIS 2.0 standards for cable. How importance is it to the strategy?
A: PVC has a great deal of strong differentiation in their silicon cable product. Only 2.0 certified part. Has a head in 2.1 standard. 20 to 1 advantage as a result of their lead. Lead is defensivable. Similar to JNPR model.
Q: Does movement to WDM for cable change the model? Implementation is hard?
A: We are confident on ability execute.
Q; Will products turn the cycle around faster as opposed to market conditions?
A: No idea. Too soon to guess. Middle of this Q will see the spending forecast from carriers.
Q: Carrier spending usually down in Q1. So will Asia pick up. Assumptions for flat rev?
A: Hard to predict mix for next Q. Across markets have core, access, and mobile and cable will start to gain traction.
Q: No wanting to compete with customer? Color?
A: Selling network intelligence to enterprise commoditizes the backbone. This will not make a successful model for the carriers. So we do not sell to carrier customers (enterprise customers). Carrier want supplier that their success is tied to carrier's success.
Q: Visibility still challenging?
A: No change.
Q: Service providers not expected to change cap ex spending this year? Anymore visibility?
A: 1/2 year guidance since many customers have made 1/2 year budget decisions.
Q: RBOC's, IP vendor not made and impact on this space. Is the migration to an IP model being delayed.
A: RBOC's starting to focus on IP model, but difficult as they have a lot of legacy equipment. No confusion in minds of RBOC's on model. Focus is on the transition model and the timing. PTT included in this group. Multiservices is the goal. The faster that happens the cheaper it will be, but security and realibility is the issues. They need to be the same as the existing model.
JNPR CC Q4 January 2002
Q4 sales as outlined i n warning.
Sale 151 mil. EPS 5 cents.
887 units sold. 11,800 ports.
1 ten per. customer.
??? new customers. XOXO, Inmarsta. Red Iris in Spain,
Chunwai telecom in China.
Breadth and diversity of accounts. Geography and types of applications varied.
Completed acq. of Pacific Broadband in Q4, added cable access product. 2 cable modems for every DSL line installed in the USA. Expect VoIP, DVD on demand and games to drive demand.
Margins still intact at 60 percent. DSO in range of 55 to 65 day for the year.
Customers now 500 in 45 countries. Double what we started the year with.
4 new software releases and 47 new interfaces during the year.
Core, access,cable and mobile markets targeted.
Innovation adds barrier to entry to market segment.
New COO to manage day to day marketing, sales and manfacturing.
2002 guidance:
Where will network intelligence reside? On the premises of enterprise customers or in the PTT's. Expect the PTT model to win. PTT's need to have a realible network to do that though. Current IP infrastructure does not have this.
1.7 bil in equipment installed to date. 300 mil in R+D spent. 500 customers.
Financials:
Rev 151 mil down from 201 mil Q-Q
B2b > 1.0
WCOM only > 10 per customers. Cuts at other carriers having effect.
Inlt rev 24 per down from 34 per Q-Q. weakness in Asia.
For year total Intl sales 31 per. of rev. down from expectation.
Rev from direct sales force 67 per. up from 58 per. Q-Q.
GM 61.2 percent. up from 60.4 per q-q
R+D 21.6 per ver 18.8 per q-q
S+M 19.4 per ve 16.7 per q-q
G+A 5.6 ver 4.6 Q-Q
Op Ex includes additional 1.2 mil from PVC acq.
27.7 mil in good will write offs
R+D write off of 4.2 mil due to PVC acq.
Op Ex. down 10.1 mil Q-Q, down 21 mil from Q1
OM 14.4 per ver 20.4 per Q-Q
Tax Rate 32 per.
Cash 1.7 bil, positive cash flow of 28 mil in Q, 380 mil to date in year
AR 103.5 mil
DSO 62 days up 12 days Q-Q due to poor linearity in Q.
Deferred Rev 36.8 mil, uo 4.8 mil q-q
1226 employees up from 1085 last Q, due to PVC acq.
2002 guidance:
Visibility still limited.
Q1 Rev 150 to 155 mil, EPS 3 cents
1H Rev 305 to 315 mil, EPS 7 cents
Acq add 7 mil to run rate.
2 mil to be invested in ERCIY joint venture.
GM at the 61 percent
Interest income will decrease due to lower interest rates.
Tax 32 percent in 2002
Expect to remain cash flow positive.
No activity in stock re-purchase.
Q: Color on weakness in Asia? break down. Guidance for First half of year? Cap Ex?
A: Intl softnesss due to short fall in Asia not Europe. More fall off in Asia. North Amer. still a function in individual carriers. Europe not country specific. Depends on company. Europe was down, but not as much as expected. Asia was down more than expected.. Cap Ex 30 to 40 mil; for year.
Q: Linearity in Q?
A: Was back end loaded, but is typical of Q4 in past. No trend.
Q: Number of units shipped? Short fall from 10 per customers ERICY and Q not coming back?
A: 887. 1025 last Q. No particular customers. Sales in asis below expectations.
Q: Progress in wireless area. Rev from ERICY joint venture?
A: In December Inmarsat indicate acceptance of joint venture products. No rev to date. Seeing some revenue from China Mobile though aas a result of partnership. Business built on core router business. Growth going forward will be due to access portfolio, cable piece, and mobile products. This drives traffic growth to drive demand for core products.
Q: Percent of 01 sales that will not be coming back for more orders?
A: Very little exposure to those types of companies in 2001. Most of ILEC built out in metro area. Had some exposure in Pan-Europe area earlier in year, but now gone. No exposure to vendor financing. Customers we had will be customers of future. Lost customers very small.
Q: China stable, Asia weak in pre-announce. Still the case?
A: No effect of China telecom announcement. Seeing some effect in Japan also. Low sales surprised us in this region.
Q: Competitors? CSCO 12000?
A: Same competitors and conditions of the last few years.
Q: Carriers happy with speed and capacity at core. Are the 40 gig router a 2002 opportunity?
A: Increase access will drive core equipment demand. Simplicity to manage network will be key. Optical infrastructure already in the ground. Laying cable is current not the issue. Higher bandwidth easier to manage than a smaller number of narrow bandwidth systems.
Q: Cash flow from operations? DNA? Steady state cashflow going forward?
A: 14 mil charge included in 28 mil positive cash flow. Still have some ECM liability.
Cash flow will be 20 mil in next Q. After that will not have ECM charge.
Q:Any pricing pressure? Re-negotiation of terms?
A: No change noted last Q. Changes are more in over all cap ex for year.
Spending smaller amounts of money more frequently. over shorter time periods.
No competitive pricing pressure. No one buys cheaper routers because they are inferior.
Q: Mix of first half of 2002? Given access focus. GM will suffer?
A: Q4 numbers, units shipments down, interface decrease less than unit decrease Q-Q. GM less impacted since more interface cards shipped.
Q: PVC acq. DOCSIS 2.0 standards for cable. How importance is it to the strategy?
A: PVC has a great deal of strong differentiation in their silicon cable product. Only 2.0 certified part. Has a head in 2.1 standard. 20 to 1 advantage as a result of their lead. Lead is defensivable. Similar to JNPR model.
Q: Does movement to WDM for cable change the model? Implementation is hard?
A: We are confident on ability execute.
Q; Will products turn the cycle around faster as opposed to market conditions?
A: No idea. Too soon to guess. Middle of this Q will see the spending forecast from carriers.
Q: Carrier spending usually down in Q1. So will Asia pick up. Assumptions for flat rev?
A: Hard to predict mix for next Q. Across markets have core, access, and mobile and cable will start to gain traction.
Q: No wanting to compete with customer? Color?
A: Selling network intelligence to enterprise commoditizes the backbone. This will not make a successful model for the carriers. So we do not sell to carrier customers (enterprise customers). Carrier want supplier that their success is tied to carrier's success.
Q: Visibility still challenging?
A: No change.
Q: Service providers not expected to change cap ex spending this year? Anymore visibility?
A: 1/2 year guidance since many customers have made 1/2 year budget decisions.
Q: RBOC's, IP vendor not made and impact on this space. Is the migration to an IP model being delayed.
A: RBOC's starting to focus on IP model, but difficult as they have a lot of legacy equipment. No confusion in minds of RBOC's on model. Focus is on the transition model and the timing. PTT included in this group. Multiservices is the goal. The faster that happens the cheaper it will be, but security and realibility is the issues. They need to be the same as the existing model.
JNPR CC Q4 January 2002
Q4 sales as outlined i n warning.
Sale 151 mil. EPS 5 cents.
887 units sold. 11,800 ports.
1 ten per. customer.
??? new customers. XOXO, Inmarsta. Red Iris in Spain,
Chunwai telecom in China.
Breadth and diversity of accounts. Geography and types of applications varied.
Completed acq. of Pacific Broadband in Q4, added cable access product. 2 cable modems for every DSL line installed in the USA. Expect VoIP, DVD on demand and games to drive demand.
Margins still intact at 60 percent. DSO in range of 55 to 65 day for the year.
Customers now 500 in 45 countries. Double what we started the year with.
4 new software releases and 47 new interfaces during the year.
Core, access,cable and mobile markets targeted.
Innovation adds barrier to entry to market segment.
New COO to manage day to day marketing, sales and manfacturing.
2002 guidance:
Where will network intelligence reside? On the premises of enterprise customers or in the PTT's. Expect the PTT model to win. PTT's need to have a realible network to do that though. Current IP infrastructure does not have this.
1.7 bil in equipment installed to date. 300 mil in R+D spent. 500 customers.
Financials:
Rev 151 mil down from 201 mil Q-Q
B2b > 1.0
WCOM only > 10 per customers. Cuts at other carriers having effect.
Inlt rev 24 per down from 34 per Q-Q. weakness in Asia.
For year total Intl sales 31 per. of rev. down from expectation.
Rev from direct sales force 67 per. up from 58 per. Q-Q.
GM 61.2 percent. up from 60.4 per q-q
R+D 21.6 per ver 18.8 per q-q
S+M 19.4 per ve 16.7 per q-q
G+A 5.6 ver 4.6 Q-Q
Op Ex includes additional 1.2 mil from PVC acq.
27.7 mil in good will write offs
R+D write off of 4.2 mil due to PVC acq.
Op Ex. down 10.1 mil Q-Q, down 21 mil from Q1
OM 14.4 per ver 20.4 per Q-Q
Tax Rate 32 per.
Cash 1.7 bil, positive cash flow of 28 mil in Q, 380 mil to date in year
AR 103.5 mil
DSO 62 days up 12 days Q-Q due to poor linearity in Q.
Deferred Rev 36.8 mil, uo 4.8 mil q-q
1226 employees up from 1085 last Q, due to PVC acq.
2002 guidance:
Visibility still limited.
Q1 Rev 150 to 155 mil, EPS 3 cents
1H Rev 305 to 315 mil, EPS 7 cents
Acq add 7 mil to run rate.
2 mil to be invested in ERCIY joint venture.
GM at the 61 percent
Interest income will decrease due to lower interest rates.
Tax 32 percent in 2002
Expect to remain cash flow positive.
No activity in stock re-purchase.
Q: Color on weakness in Asia? break down. Guidance for First half of year? Cap Ex?
A: Intl softnesss due to short fall in Asia not Europe. More fall off in Asia. North Amer. still a function in individual carriers. Europe not country specific. Depends on company. Europe was down, but not as much as expected. Asia was down more than expected.. Cap Ex 30 to 40 mil; for year.
Q: Linearity in Q?
A: Was back end loaded, but is typical of Q4 in past. No trend.
Q: Number of units shipped? Short fall from 10 per customers ERICY and Q not coming back?
A: 887. 1025 last Q. No particular customers. Sales in asis below expectations.
Q: Progress in wireless area. Rev from ERICY joint venture?
A: In December Inmarsat indicate acceptance of joint venture products. No rev to date. Seeing some revenue from China Mobile though aas a result of partnership. Business built on core router business. Growth going forward will be due to access portfolio, cable piece, and mobile products. This drives traffic growth to drive demand for core products.
Q: Percent of 01 sales that will not be coming back for more orders?
A: Very little exposure to those types of companies in 2001. Most of ILEC built out in metro area. Had some exposure in Pan-Europe area earlier in year, but now gone. No exposure to vendor financing. Customers we had will be customers of future. Lost customers very small.
Q: China stable, Asia weak in pre-announce. Still the case?
A: No effect of China telecom announcement. Seeing some effect in Japan also. Low sales surprised us in this region.
Q: Competitors? CSCO 12000?
A: Same competitors and conditions of the last few years.
Q: Carriers happy with speed and capacity at core. Are the 40 gig router a 2002 opportunity?
A: Increase access will drive core equipment demand. Simplicity to manage network will be key. Optical infrastructure already in the ground. Laying cable is current not the issue. Higher bandwidth easier to manage than a smaller number of narrow bandwidth systems.
Q: Cash flow from operations? DNA? Steady state cashflow going forward?
A: 14 mil charge included in 28 mil positive cash flow. Still have some ECM liability.
Cash flow will be 20 mil in next Q. After that will not have ECM charge.
Q:Any pricing pressure? Re-negotiation of terms?
A: No change noted last Q. Changes are more in over all cap ex for year.
Spending smaller amounts of money more frequently. over shorter time periods.
No competitive pricing pressure. No one buys cheaper routers because they are inferior.
Q: Mix of first half of 2002? Given access focus. GM will suffer?
A: Q4 numbers, units shipments down, interface decrease less than unit decrease Q-Q. GM less impacted since more interface cards shipped.
Q: PVC acq. DOCSIS 2.0 standards for cable. How importance is it to the strategy?
A: PVC has a great deal of strong differentiation in their silicon cable product. Only 2.0 certified part. Has a head in 2.1 standard. 20 to 1 advantage as a result of their lead. Lead is defensivable. Similar to JNPR model.
Q: Does movement to WDM for cable change the model? Implementation is hard?
A: We are confident on ability execute.
Q; Will products turn the cycle around faster as opposed to market conditions?
A: No idea. Too soon to guess. Middle of this Q will see the spending forecast from carriers.
Q: Carrier spending usually down in Q1. So will Asia pick up. Assumptions for flat rev?
A: Hard to predict mix for next Q. Across markets have core, access, and mobile and cable will start to gain traction.
Q: No wanting to compete with customer? Color?
A: Selling network intelligence to enterprise commoditizes the backbone. This will not make a successful model for the carriers. So we do not sell to carrier customers (enterprise customers). Carrier want supplier that their success is tied to carrier's success.
Q: Visibility still challenging?
A: No change.
Q: Service providers not expected to change cap ex spending this year? Anymore visibility?
A: 1/2 year guidance since many customers have made 1/2 year budget decisions.
Q: RBOC's, IP vendor not made and impact on this space. Is the migration to an IP model being delayed.
A: RBOC's starting to focus on IP model, but difficult as they have a lot of legacy equipment. No confusion in minds of RBOC's on model. Focus is on the transition model and the timing. PTT included in this group. Multiservices is the goal. The faster that happens the cheaper it will be, but security and realibility is the issues. They need to be the same as the existing model.
[Harry: Does not sound like they think a definitve bottom is being put in. Lack of penetration of RBOC's and the slow deployment road map means it will be difficult going for a while.] |
